How can an MNE gain a competitive advantage by exploiting the ...

[Starlight]

How can an MNE gain a competitive advantage by exploiting the experience curve? Provide an example to illustrate your answer.
 
  What will be an ideal response?

Question 2

Which of the following is considered to be relatively individualistic?
 
  A) United States
  B) China
  C) Singapore
  D) Mexico

[raili21]

Answer to Question 1

Another source of firm-specific advantages in international trade is exploitation of the experience curve. For certain types of products production costs decline as the firm gains more experience in manufacturing the product. Experience curves may be so significant that they govern global competition within an industry. For instance, in semiconductor chip production, unit cost reductions of 25 to 30 percent with each doubling of a firm's cumulative chip production are not uncommon. Any firm attempting to be a low-cost producer of so-called commodity chipssuch as DRAM memory chipscan achieve that goal only if it moves further along the experience curve than its rivals do. Both U.S. and Asian chip manufacturers have often priced their new products below current production costs to capture the sales necessary to generate the production experience that will in turn enable the manufacturers to lower future production costs.

Answer to Question 2

A